FHA lets the entire down payment come from a gift. That’s one of the program’s most useful features, and it’s also one of the most common places a file gets stuck, because gift documentation is fussy and people get it wrong.
Here’s how to get it right the first time.
FHA accepts gifts from:
FHA does not accept gifts from anyone with a financial interest in the transaction: the seller, the real estate agent or broker, the builder, or any party that benefits from the sale closing.
All of it. With a 580 or higher score and 3.5% down, 100% of the down payment can be a gift. You are not required to contribute any of your own funds.
Gifts can also cover closing costs, prepaids, and the upfront mortgage insurance premium. There’s no cap on the gift amount.
Every gift needs a letter, signed by the donor, containing:
Lenders have a standard form. Use it. A handwritten note that says “here’s some money for the house” is not a gift letter.
This is where files get delayed. FHA needs a paper trail showing the money moved from the donor to you (or directly to closing). The documentation depends on timing:
Cash gifts don’t work. If a relative hands you $10,000 in cash and you deposit it, there’s no way to prove where it came from. Ask the donor to write a check or send a transfer instead.
Sometimes. The underwriter may ask for the donor’s bank statement to confirm the funds were actually theirs and not, for instance, borrowed. If the donor’s statement shows a large recent deposit, that can trigger questions about where the donor got it. This isn’t about distrust. It’s about making sure a “gift” isn’t a disguised loan.
Gift funds do not need to be seasoned. They can arrive in your account the week before closing. What matters is the documentation, not the timing.
Order doesn’t technically matter, but it’s cleaner if the letter exists before the transfer.
If you deposit $15,000 without a gift letter and documentation, the underwriter will ask about it. Have the paperwork ready.
A gift from the seller’s brother, or from the agent’s relative, doesn’t work.
If the donor expects any of it back, it’s a loan, and it has to be disclosed and counted in your DTI. Calling a loan a gift is mortgage fraud.
Be ready to explain who they are and why they’re giving you money. Underwriters see this and want a reason it makes sense.
These are different things and sometimes get confused. A gift comes from a person or organization and is yours to keep. Down payment assistance comes from a government or nonprofit program and often comes with conditions: a second lien, a forgiveness period, or income limits. Both can be used on an FHA loan, sometimes together. If you’re using both, tell your lender early so the layering can be structured correctly.
Yes. Family gifts can cover all of it.
The recipient doesn't. The donor may need to file a gift tax return if the amount exceeds the annual exclusion, but that's usually a reporting requirement rather than a tax owed. Ask a tax professional.
Not as "family," since you're not yet related by marriage. Possibly as a "close friend with a documented relationship," which will be scrutinized. Simpler to wait until after the wedding, or have the fiancé be a co-borrower.
Generally no. Reserves need to be your own funds. Gifts cover the down payment and closing costs.
Barrett Financial Group originates in 48 states. Get in touch and I’ll connect you with a licensed originator in yours.
